(Reuters) - Home Capital Group Inc (HCG.TO) on Friday named Alan Hibben to its board, replacing Gerald Soloway, one of the founders of the mortgage lending company, who announced last month he planned to retire.
The move is effective immediately. The company said in a statement the change was part of its “governance renewal.” It could not immediately be reached for further comment.
Canada’s biggest nonbank mortgage lender has suffered a crisis of confidence since a securities regulator alleged earlier this year that its top executives hid mortgage broker fraud from investors. The uncertainty hit as Ontario’s provincial government introduced measures to cool Toronto’s red-hot housing market.
The company has said it will defend itself against the allegations.
Home Capital’s high interest savings account (HISA) deposits have fallen by 75 percent following news of the regulatory probe, as nervous depositors pull their money out.
With roughly three-quarters of its funding needs coming from guaranteed investment certificates (GICs), investor focus is also on the lender’s term deposits and other funding sources, many of which are maturing or up for renewal this year.
Earlier this week, National Bank analysts estimated that about 70 percent of Home Capital’s GICs are coming up for maturity over the next year. It remains to be seen whether investors will renew or withdraw the GICs, or sign up for new ones.
According to Thomson Reuters data, the company also has $236 million in bonds maturing in 2017, and C$325 million ($237.3 million) institutional deposit notes maturing on May 24.
The company said on Friday it had made “considerable progress” in identifying new candidates for the board and for a new chief executive.
Home Capital shares have fallen more than 70 percent since early April. The stock fell 2.7 percent on Friday to close at C$5.85.
Home Capital’s quarterly results, originally expected on Wednesday, will be released on May 11.
Hibben, who retired as a managing director from RBC Capital Markets in 2014, has been an adviser to the Province of Ontario on a number of files including the Companies’ Creditors Arrangement Act processes for Stelco and Algoma Steel.
Hibben will stand for election at Home Capital’s annual meeting to be held next month in Toronto, the company said.
DBRS, which downgraded the company earlier this week, said in a statement Hibben’s appointment was an “important first step toward restoring market confidence.”
($1 = 1.3697 Canadian dollars)
Reporting by Solarina Ho in Toronto and Arathy S Nair in Bengaluru; Editing by Supriya Kurane and Matthew Lewis